Spoilt for choice? Multinational corporations and the geography of international production

This paper questions the view that foreign direct investment(FDI) is producing an integrated world production and tradingsystem. Although multinational firms have a greater choice oflocations than in the past, their recent investments abroadhave taken place within a regional, rather than global, framework.The upsurge of FDI flows from North to South has been attractedby just a handful of fast-growing developing countries. Thepaper disputes the claim that the road to development is forpoor countries to attract FDI on the scale observed in suchcountries as Malaysia. This claim involves a fallacy of composition.While FDI can make a valuable contribution, most countries willhave to rely mainly on their own resources and indigenous producers.The paper argues that current proposals for a Multilateral Agreementon Investment neglect both the regional aspects of integrationand the need of poorer countries to promote their domestic supplycapabilities. Conflicts of interest which are ignored in thecurrent rhetoric suggest the continuing relevance of a strategicpolicy approach to international production.